Yahoo Movies Highway Holdings Limited (NASDAQ:HIHO): Has Recent Earnings Growth Beaten Long-Term Trend?
After looking at Highway Holdings Limited’s (NASDAQ:HIHO) latest earnings update (30 September 2018), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings.
See our latest analysis for Highway Holdings
Were HIHO’s earnings stronger than its past performances and the industry?
HIHO’s trailing twelve-month earnings (from 30 September 2018) of US$985k has increased by 7.5% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.2%, indicating the rate at which HIHO is growing has accelerated. What’s the driver of this growth? Let’s see if it is merely because of industry tailwinds, or if Highway Holdings has experienced some company-specific growth.
In terms of returns from investment, Highway Holdings has fallen short of achieving a 20% return on equity (ROE), recording 9.2% instead. Furthermore, its return on assets (ROA) of 5.9% is below the US Machinery industry of 6.6%, indicating Highway Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Highway Holdings’s debt level, has declined over the past 3 years from 12% to 11%.
What does this mean?
Though Highway Holdings’s past data is helpful, it is only one aspect of my investment thesis. While Highway Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Highway Holdings to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for HIHO’s future growth? Take a look at our free research report of analyst consensus for HIHO’s outlook.
Financial Health: Are HIHO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
